Checkpoint Asia

The Unlikely End to China’s New Silk Road Is in Germany’s Rust Belt

The world's largest inland port has been rejuvenated by train freight from China

Inaugurated by Xi in 2014

The vast map of the world that hangs in Shanghai Pudong airport shows only four European cities. Three — Paris, London, Berlin — are marked with small dots. The biggest is reserved for Duisburg.

This might seem a strange choice. Stuck in Germany’s northwestern rust belt, the city is hardly a throbbing metropolis and was long a byword for industrial decline and unemployment.

But Duisburg is the world’s largest inland port and one of Europe’s biggest transport and logistics hubs. It is also the western terminus of Chinese leader Xi Jinping’s new Silk Road, the Belt and Road Initiative, to finance and build infrastructure in more than 80 countries.

“The Chinese see Duisburg and its port as their gateway to western Europe,” said Johannes Pflug, the city’s commissioner for China. “That has given it a whole new significance.”

The China factor is clearly visible in Duisburg Intermodal Terminal, one of several such cargo-handling hubs in the port. Every day containers arriving by train from Chongqing and Wuhan are loaded on to trucks and ships and distributed to Italy, Switzerland, France and beyond. Chinese logos — Cosco, China Shipping, UES — are ubiquitous.

The terminal’s big China breakthrough came in 2014, when Xi came to welcome a train arriving from Chongqing. “Growth of our China traffic has been exponential since then,” said Amelie Erxleben, DIT’s head of international development. Thirty of the 90 trains DIT receives every week are from China, she said.

Last year the company leased an additional 200,000 square meters of land from Duisburg Port to cope with its growing China business. “It was the last available space,” Erxleben said. “We’re really reaching the limits of our capacity here.”

China’s Belt and Road plan is increasingly controversial in the West. There was dismay in Berlin and Paris last month when Italy, hoping for new investment in its stagnant economy, became the first G7 country to endorse the program.

The move came at a time of increasing concern in Europe about China’s global ambitions. As the EU prepared for a bilateral summit with China this month, the European Commission issued a paper branding the country an “economic competitor” and “systemic rival.” It warned that Chinese investments in some countries “may result in high-level indebtedness and transfer of control over strategic assets and resources.”

Germany has in recent months assumed a particularly hawkish stance on China. Foreign Minister Heiko Maas sharply criticized Italy for breaking ranks with its allies over the BRI. “If some countries think they can do clever deals with the Chinese, they’ll be surprised and wake up one day dependent [on China],” he said. Offers that seemed lucrative in the short term could “acquire a bitter aftertaste.”

But in Duisburg, few share Maas’ skepticism. “The BRI is a huge opportunity for us,” said Erich Staake, head of Duisburg Port AG. Last year, the city received 6,300 trains from China. That could rise to 10,000 within the next five years, he said.

The appeal of the rail connection is clear: It takes 45 days to ship goods by sea from Chongqing to Duisburg, and only about 13 days by rail. In the future, Staake hopes to bring that down to 10.

The increased traffic with China has acted as a “catalyst” for other investors, said Pflug. They include transport and logistics company Kuehne + Nagel, which recently set up one of its biggest European hubs in Duisburg. The number of Chinese companies active in the city had doubled to 100 in the past five years, Pflug said. Chinese developer Starhai plans to build a €260 million “China Trade Center Europe” in one of Duisburg’s business parks.

However, Staake said he understood the alarm about China’s rise. “You get the impression some people feel blindsided by the speed with which China is creating new trading routes and by the influence it’s acquired through its investments along the Silk Road in places like Africa and southern Europe,” he said.

But he is fatalistic about a process he sees as inevitable. “I know of no case in history when big powers haven’t deployed all their power and strength to create dependencies, and I’d be amazed if China turned out to be an exception,” he said.

A short walk from his office, the Kingdom, a big Chinese restaurant housed in a former car showroom, stands near the confluence of the Rhine and Ruhr rivers. Manager Qing Wang has just opened a German-Chinese Business Center on the first floor. A table flanked with Chinese and German flags stands ready for ceremonial contract signings while a poster welcomes visitors with the words “Where the train stops, the opportunities begin.”

“Since President Xi came here, everyone in China knows about Duisburg,” Wang said. One businessman familiar with the city is Chang Su, head of SRL Global Forwarding. Based in the southern Chinese city of Chengdu, his company, which specializes in customs brokering, is looking to build a bonded warehouse in Duisburg.

“We’re hoping there’ll be a direct rail link soon between Chengdu and Duisburg, and when it comes we want to be ready,” Su said.

Pflug, a former Bundestag MP and long-term East Asia expert who has visited China more than 60 times, is proud of Beijing’s obsession with his city. But he also has red lines when it comes to Chinese investment.

He wants to ensure Duisburg doesn’t share the same fate as Hambantota, a Sri Lankan port, which in 2017 passed to Chinese control under a 99-year lease.

“We must preserve our independence and at all costs avoid falling into a debt trap with the Chinese,” Pflug said. “We don’t want to end up like Sri Lanka.”

Source: OZY